Treasury Announces Details Of First Long-Term Securities Auctions Of 2020

Trading 07 Jan 2021 Commentaire »

The Treasury Department on Thursday announced the details of the first auctions of three-year and ten-year notes and thirty-year bonds of the New Year.

The Treasury revealed it plans to sell $58 billion worth of three-year notes, $38 billion worth of ten-year notes and $24 billion worth of thirty-year bonds.

The results of the three-year note auction will be announced next Monday, the results of the ten-year note auction will be announced next Tuesday and the results of the thirty-year bond auction will be announced next Wednesday.

Last month, the Treasury sold $56 billion worth of three-year notes, $38 billion worth of ten-year notes and $24 billion worth of thirty-year bonds.

The three-year and ten-year note auctions attracted below average demand, while the thirty-year bond auction attracted above average demand.


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U.S. Services Index Unexpectedly Indicates Faster Growth In December

Trading 07 Jan 2021 Commentaire »

Service sector activity in the U.S. unexpectedly grew at a faster pace in the month of December, according to a report released by the Institute for Supply Management on Thursday.

The ISM said its services PMI rose to 57.2 in December from 55.9 in November, with a reading above 50 indicating growth in the service sector. Economists had expected the index to edge down to 54.6.

"The composite index indicated growth for the seventh consecutive month after a two-month contraction in April and May," said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

Nieves said respondents' comments about business conditions and the economy were mixed but noted most are "cautiously optimistic about business conditions with the recent approval and impending distribution of vaccines."

The unexpected uptick by the headline index came as the business activity index inched up to 59.4 in December from 58.0 in November, while the new orders index crept up to 58.5 from 57.2.

The supplier deliveries index also jumped to 62.8 in December from 57.0 in November, although the index is inversed and a reading of above 50 percent indicates slower deliveries.

Meanwhile, the report said the employment index slid to 48.2 in December from 51.5 in November, indicating a contraction in employment in the service sector after three consecutive months of growth.

The prices index also fell to 64.8 in December from 66.1 in November, pointing to a modest slowdown in the pace of price growth.

Andrew Hunter, Senior U.S. Economist at Capital Economics, called the unexpected increase by the services PMI "hard to square with the range of other evidence showing that the latest wave of virus cases and restrictions is starting to weigh more heavily on the economy, particularly services."

"Like the manufacturing survey released earlier this week, the headline services reading received an artificial boost from a jump in the supplier deliveries component, which reflects virus-related disruption rather than stronger demand," Hunter said.

He added, "But the business activity and new orders components also picked up, which is at odds with the generally downbeat tone of the comments in the press release and with the recent dips in the other services-sector surveys."

A separate report released by the ISM on Tuesday showed an unexpected acceleration in the pace of growth in U.S. manufacturing activity in the month of December.

The ISM said its manufacturing PMI climbed to 60.7 in December after dipping to 57.5 in November, with a reading above 50 indicating growth. Economists had expected the index to edge down to 56.6.

With the unexpected increase, the manufacturing index reached its highest level since hitting 61.3 in August of 2018.

However, economists noted the headline index was artificially boosted by a jump by the supplier deliveries index, which suggested deliveries slowed at a faster rate.


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Eurozone Economic Sentiment Improves, Inflation Remains Negative

Trading 07 Jan 2021 Commentaire »

Eurozone economic sentiment improved at the end of the year, the large part of which was ravaged by the coronavirus pandemic, and separate data showed that euro area inflation remained in the negative territory and retail sales fell unexpectedly.

Eurozone economic sentiment rose slightly more than expected at the end of the year 2020, preliminary data from the European Commission showed on Thursday.

The economic sentiment index rose to 90.4 from 87.7 in November. Economists had forecast a score of 90.

The ESI's recovery was driven by markedly higher confidence in industry and among consumers and, to a lesser degree, in construction, the commission said. Confidence weakened in services and retail trade.

The industrial confidence index improved to -7.2 from -10.1 in the previous month. Economists had expected a reading of -8.1.

The consumer confidence index climbed to -13.9 from -17.6 in November, matching its flash estimate.

The index for services confidence weakened to -17.4 from -17.1 in the previous month. Economists had forecast a score of -15.0.

The retail trade sentiment index fell to -13.1 from -12.7, while the construction confidence index rose to -7.9 from -9.3.

The survey also showed that the Employment Expectations Indicator partially recovered in December and added 1.4 points to 88.3. Consumer price expectations decreased in December.

"Activity data published this morning suggest that the euro-zone economy performed better in Q4 than we had anticipated," Capital Economics economist Jack Allen-Reynolds said.

"But the recent extensions of lockdowns make it more likely that the economy shrinks in Q1."

Among the big euro area economies, the economic sentiment improved strongly in Italy, Spain and, to a lesser extent, in the Netherlands and France. Morale was broadly unchanged in Germany.

Separate data from Eurostat showed that Eurozone's headline inflation and core price growth was unchanged in December.

The harmonized consumer price index, or HICP, dropped 0.3 percent year-on-year, same as in November. Economists had forecast a 0.2 percent fall.

The core CPI, which excludes prices of food, energy and alcohol & tobacco, rose 0.2 percent year-on-year, same as in November. That was in line with economists' expectations.

Compared to the previous month, the headline HICP climbed 0.3 percent and the core index rose 0.4 percent in December.

Among the main components, the highest annual inflation rate was for the food, alcohol & tobacco group. The rate of inflation eased to 1.4 percent from 1.9 percent in the previous month.

Services cost inflation rose to 0.7 percent from 0.6 percent in November. Prices of non-energy industrial goods decreased 0.5 percent after a 0.3 percent fall in November.

Energy prices dropped 6.9 percent, which was slower than the 8.3 percent decline in the previous month.

The full HICP data for December is set to be released on January 20.

Eurostat also reported that the euro area retail sales fell in November, defying expectations for further increase.

Retail sales decreased 2.9 percent year-on-year, while economists had forecast 0.8 percent growth.

October's growth was revised to 4.2 percent from 4.3 percent.

Compared to the previous month, sales fell 6.1 percent in November, which was nearly double of the 3.4 percent fall economists had expected.

The monthly growth for October was revised to 1.4 percent from 1.5 percent.

The COVID-19 containment measures introduced again by several Member States had a significant impact on retail trade, Eurostat said.


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Germany Construction Sector Decline Slows In December

Trading 07 Jan 2021 Commentaire »

Germany's construction sector continued to contract in December, albeit at a softer pace, survey data from IHS Markit showed Thursday.

The construction Purchasing Managers' Index rose to 47.1 in December from 45.6 in November.

The latest reading was the highest in four months. Any reading below 50.0 indicates contraction in the sector.

Housing activity grew in December, though the pace of expansion eased since November. Meanwhile, commercial activity and work on civil engineering declined.

Employment decreased marginally in November, while purchasing levels rose for the first time since February last year.

The rate of purchase price inflation surged to the highest since February last year.

The 12-month outlook weakened in December due to the worries about the hit to client demand from the pandemic.

"December's construction data pointed to increasing signs of stability after a challenging period for the sector, with the headline PMI moving to a four-month high and new orders showing the smallest decline since the start of the pandemic," Phil Smith, associate director at IHS Markit, said.

Separate data from IHS markit showed that the France's construction PMI fell to 40.5 in December from 42.8 in November.

Italy's construction PMI rose to 50.5 in December from 49.8 in the prior month.

Eurozone's construction PMI declined marginally to 45.5 in December from 45.6 in the previous month.


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*ISM U.S. Services PMI Rises To 57.2 In December

Trading 07 Jan 2021 Commentaire »

ISM U.S. Services PMI Rises To 57.2 In December


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U.S. Trade Deficit Widens More Than Expected Amid Jump In Imports

Trading 07 Jan 2021 Commentaire »

Reflecting a jump in the value of imports, the Commerce Department released a report on Thursday showing the U.S. trade deficit widened by more than expected in the month of November.

The Commerce Department said the trade deficit widened to $68.1 billion in November from $63.1 billion in October. Economists had expected the deficit to widen to $65.2 billion.

The trade deficit in November was the largest since the deficit reached a record $68.3 billion in August of 2006.

The wider than expected trade deficit came as the value of imports spiked by 2.9 percent to $252.3 billion, outpacing a 1.2 percent jump in the value of exports to $184.2 billion.

"The widening of the trade deficit in November came as import growth continued to outpace export growth and means net trade will be a significant drag on fourth quarter GDP growth," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "Those additional imports are helping to rebuild inventories, however, which will provide an offsetting positive boost, meaning we still estimate that GDP growth last quarter was close to 3% annualized."

The sharp increase in the value of imports was partly due to a spike in imports of consumer goods, particularly cell phones and other household goods.

Imports of industrial supplies and materials and capital goods also saw notable growth, while imports of passenger cars slumped.

Meanwhile, the report showed a sizable increase in exports of services as well as upticks in exports of natural gas and foods, feeds and beverages.

The Commerce Department said the goods deficit widened to $86.4 billion in November from $81.4 billion in October, while the services surplus was nearly unchanged at $18.2 billion.


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U.S. Weekly Jobless Claims Unexpectedly Show Slight Decline

Trading 07 Jan 2021 Commentaire »

A day ahead of the release of the closely watched monthly jobs report, the Labor Department released a report on Thursday showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended January 2nd.

The report said initial jobless claims edged down to 787,000, a decrease of 3,000 from the previous week's upwardly revised level of 790,000.

Economists had expected jobless claims to rise to 800,000 from the 787,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also fell to 818,750, a decrease of 18,750 from the previous week's revised average of 837,500.

Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also declined by 126,000 to 5.072 million in the week ended December 26th.

The four-week moving average of continuing claims dropped to 5,274,750, a decrease of 177,250 from the previous week's revised average of 5,452,000.

"Continuing claims for regular state benefits continued to decline in the week ended December 26, but much of the downward trend reflects individuals exhausting their regular benefits," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

"Claims for state extended benefits - a last stop for many individuals who have exhausted all other benefits - rose sharply," she added. "That increase is particularly noteworthy because fewer than half of states currently provide these benefits."

On Friday, the Labor Department is scheduled to release a separate report on the employment situation in the month of December.

Economists expect employment to rise by 71,000 jobs in December after climbing by 245,000 jobs in November. The unemployment rate is expected to inch up to 6.8 percent from 6.7 percent.


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German Factory Orders Continue To Grow

Trading 07 Jan 2021 Commentaire »

Germany's manufacturing orders grew for a seventh straight month in November, defying expectations for a decline, suggesting that manufacturing may have offset the slump in the service sector due to the second lockdown to battle the coronavirus pandemic.

Factory orders rose 2.3 percent month-on-month in November, figures from the Federal Statistical Office/Destatis showed Thursday. while economists had forecast a 1.2 percent fall.

The growth for October was revised to 3.3 percent from 2.9 percent. Orders have grown every month since May.

Excluding major orders, real new orders in manufacturing rose 1.6 percent from the previous month.

Domestic orders increased 1.6 percent and foreign demand grew 2.9 percent.

Demand for intermediate goods grew 4.9 percent and orders for capital goods rose 1.1 percent. Consumer goods orders increased 0.5 percent.

On a year-on-year basis, factory orders grew 6.3 percent in November after a 2.3 percent increase in the previous month.

The latest increase in orders is "undoubtedly good news" for the German manufacturing sector and for production, Commerzbank said, which expects production to increase in the coming months given the positive trend in orders.

"All this is unlikely to prevent real GDP from shrinking in Q4 due to the new restrictions imposed to contain the corona pandemic," Commerzbank analyst Marco Wagner said.

"However, the very positive development in manufacturing should keep this decline in check."


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U.S. Trade Deficit Widens More Than Expected In November

Trading 07 Jan 2021 Commentaire »

Reflecting a jump in the value of imports, the Commerce Department released a report on Thursday showing the U.S. trade deficit widened by more than expected in the month of November.

The Commerce Department said the trade deficit widened to $68.1 billion in November from $63.1 billion in October. Economists had expected the deficit to widen to $65.2 billion.

The wider than expected trade deficit came as the value of imports spiked by 2.9 percent to $252.3 billion, outpacing a 1.2 percent jump in the value of exports to $184.2 billion.


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Loonie Little Changed After Canada Trade Data

Trading 07 Jan 2021 Commentaire »

After the release of Canada trade data for November at 8:30 am ET Thursday, the loonie changed little against its major counterparts.

The loonie was trading at 1.5600 against the euro, 81.47 against the yen, 0.9848 against the aussie and 1.2715 against the greenback around 8:34 am ET.


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